21.9 Million Reasons to Believe in Sirius XM

The satellite radio giant announced preliminary subscriber numbers for 2011. Sirius XM closed out the year with nearly 21.9 million subs, 1.7 million ahead of where it was when the year began.

It's an encouraging showing.

When Sirius XM landed 334,000 net new subscribers during the third quarter -- less than the 400,000 that analysts were expecting -- investors began to worry that the media company wouldn't be able to tack on the roughly 440,000 net additions necessary in the final quarter to hit the company's earlier goal of 1.6 million more subscribers for all of 2011. Well, it was able to sign up approximately 540,000 more accounts than those that cancelled during the final three months of the year.

This is obviously an incomplete metric. There's been anecdotal evidence of Sirius XM offering steep near-term discounts to keep folks from bolting. If this is true -- and I can tell you that I was offered a half-price plan for six months to extend a free trial on a car I bought back in April -- the 1.7 million net additions won't be all that impressive. We'll have a clearer picture there once CEO Mel Karmazin divulges the average revenue per user in next month's quarterly report. Sirius XM reiterating its revenue guidance for all of 2011 yesterday is too round a figure to clear up what average revenue per user will in a few weeks.

It's still worth noting that Sirius XM padded its account base by 8% -- going from 20.2 million to 21.9 million -- last year. You have to go all the way back to 2007 to find the last time that Sirius XM closed out a year with more than 1.7 million net subscribers being added.

These are competitive times, especially for drivers seeking ear candy. Next week's North American International Auto Show in Detroit will unveil the latest new toys that automakers are adding to their cars to make their dashboards.

Should Sirius XM be worried?

Well, let's survey the landscape. Pandora's (NYS: P) growing quickly and just managed to post back-to-back quarters of profitability. Ford (NYS: F) kicked off the smartphone-streaming potential with its SYNC and later MyFord Touch features. Toyota's (NYS: TM) Entune raised the bar last year, giving drivers a shiny touchscreen interface where Pandora and iHeartRadio are two of the six initial icons available to smartphone-donning drivers.

This would all seem to be pretty disruptive to Sirius XM, but do I need to read you the press release again? Sirius XM is not only at a record 21.9 million subscribers right now, but it also had its most successful year in terms of net additions in years.

As long as next month's average revenue per subscriber didn't take too bad a hit, Sirius XM once again is worthy of your bullish intentions.

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